Friends, you all are aware that Life Insurance Corporation (LIC) is the biggest public sector insurance company, which started about 65 years back. The fact is, it is still the most preferred life insurance company in spite of many privately-owned companies being there in the market. LIC’s much-awaited mega IPO was offered to the public about two months back and had a good response and was fully subscribed, in the price band offered in IPO. But when the insurance giant listed its share in the stock market, it turned out to be a disappointing debut for India’s biggest life insurance company, as the share was listed 8% below the price at which it was offered to the public.
While this has become a concern for the investors, the details from LIC IPO documents that were filed during its IPO filing process, reveal another aspect of India’s insurance giant. The amount of money lying unclaimed with LIC is Rs 21,539.5 Cr, which is bigger than the entire budget of not just one but multiple ministries of our country. Yes, you read that right. Unclaimed amounts include settled claims which have not been paid out, sums that become due when policies mature as well as excess amounts paid which are to be refunded. The largest amount due is because policies matured but money has not reached investors. They account for Rs 19,285 Cr or nearly 90% of the total amount.
The scale of the massive outstanding amount is much higher than the budgets of many central govt ministries. It is larger than the budget of the Ministry of Civil Aviation (Rs 10,667 Cr), the Ministry of Electronics and Information Technology (Rs 14,300 Cr), the Ministry of External Affairs (Rs 17,250 Cr), and the Ministry of Environment, Forests and Climate Change (Rs 3,030 Cr).
And that is not all
As per the reports, close to Rs 10,000Cr budget of the first Gaganyaan, LIC’s unclaimed funds of over Rs 21,000 Cr is enough to fund two of such human spaceflight missions of Gaganyaan.
As the settled amount payable is approx Rs 19, 285 Cr, what is the remaining amount of Rs 2,254.5 Cr. In my opinion, this amount could be the result of lapse policies, where the insurers have paid few premiums and afterwards they failed to continue with the policies. If this is the case, then I think LIC should try to get in touch with these types of policy holders, and ensure that they should get the amounts refunded which were paid as the premiums for the concerned policy. LIC can keep the interest amount credited in the policyholders account.
Waiting for your views on this blog.
Anil Malik
Mumbai, India
13th June 2